Fact Sheet: India-Nepal Partnership

July 09, 2013

India’s External Affairs Minister, Shri Salman Khurshid, visited Nepal on 9th July 2013 at the invitation of the Minister for Foreign Affairs of Nepal, Hon’ble Mr. Madhav Prasad Ghimire. Both the Ministers held official talks covering all aspects of bilateral
relations and issues of mutual interests. The talks were held in an atmosphere of utmost cordiality and warmth.

During his visit, the Minister of External Affairs of India called on Rt. Hon. Dr. Ram Baran Yadav, President of Nepal and Rt. Hon. Mr. Khil Raj Regmi, Chairman of the Council of Ministers of Nepal.

External Affairs Minister of India reiterated the fact that, as a close friend, India remains strongly committed to the success of Nepal’s peace process and institutionalisation of democracy in Nepal in a constitutional and multi-party framework. India is supportive
of the successful conduct of free and fair election for the Constituent Assembly-cum-Parliament on 19th November 2013.

The visit afforded both Ministers the opportunity to review the current progress of India-Nepal partnership, some of the highlights of which are as follows:

Logistics for Constituent Assembly-cum-Parliamentary Election

Government of India has agreed to provide all the logistical support for the security agencies and Election Commission of Nepal as requested by the Government of Nepal.This comprises 764 different types of vehicles costing approximately NRs 800 million. The
vehicles will be delivered to the Government of Nepal by October 2013. The two sides exchanged Letters to this effect.

Water resources

The Ministers reviewed the joint efforts against flood-related disasters, including the repair and maintenance works at major border rivers, especially Kosi and Gandak. Besides activating all the existing bilateral consultative mechanisms and maintaining the
embankments of Kosi and Gandak under the respective bilateral agreements, India has provided grant assistance of NRS 2.543 billion during the past three years for protection works on the Kamala, Lalbakya, Khando and Bagmati rivers. For the current year, an
amount of NRS 256.94 million has been released for this purpose, and a further amount of NRs 374.47 million will be made available later in the year. In addition, India has committed grant assistance of NRS 181.37 million under the bilateral Small Development
Projects for flood protection works along Trijuga, Lkahndehi, Sunsari, Kankai, and Kaligandaki rivers and NRs 95.2 million along Gagan river.

Augmenting electricity supply

To augment electricity supply from India to Nepal, particularly during the lean season, India has already implemented short-term grid connectivity projects (grant assistance of NRs 124.6 million), resulting in Nepal importing an additional 80 MWs of electricity
through 14 different upgraded exchange points in the last lean season. A further medium-term grid upgradation project (amounting to grant assistance of NRs 464 million) has been tendered. This will enable a further drawing of between 120 – 175 MWs of electricity
from India, whenever required. To supplement financing of the long-term cross-border grid connectivity from Muzaffarpur to Dhalkebar, India’s Eximbank is contributing U.S. $13.2 million.

Eximbank Line of Credit

Specific approvals have been obtained last month for Phase II of the Rahughat Hydroelectric Project, 220 KV Kosi Corridor Transmission Line Project, 132 KV Solu Corridor Transmission Live Project, and the 132 KV Modi Leknath Transmission Line Project, for utilising
$175 million or NRs 15.8 billion out of the existing $250 million Exim bank’s Line of Credit for Nepal. Approvals for utilisation of the balance amount, for the construction of roads within Nepal, are in the pipeline.

Trade and economic cooperation

India accounts for nearly two-thirds of Nepal’s foreign trade, 70% of Nepal’s exports, and almost half of its foreign direct investments. The Ministers felt the need to continue consultations on measures to promote trade bilaterally and with third countries
to optimize opportunities for Nepal’s economic growth, including on finalising legal and administrative arrangements for additional transit routes, revision of the Rail Services Agreement to enable the implementation of the long-standing Nepalese request for
the movement of open box wagons and transit of bulk cargo movement on flat wagons, finalisation of the Motor Vehicles Agreement, energy banking and power trading, currency conversion facilitation, new routes for increased air-connectivity, and strengthening
Nepal’s capacity forcertification for food and agriculture products exports by establishing testing and lab facilities along the India-Nepal border.

Defence cooperation

India-Nepal defence ties include military educational exchanges, joint exercises, and supplies of military stores and equipment, as required by Nepal. Following the successful completion of integration of former Maoists combatants into the Nepal Army (NA) and
the decision of the Government of Nepal to resume imports of stores and equipment for NA, these materials, identified in the Bilateral Consultative Group on Security Issues, will be supplied to Nepal over the coming months (the immediate supplies sought are
valued at NRs 1.76 billion).

Development partnership

The Ministers reviewed progress of the bilateral development partnership programme, which includes large, cross-border connectivity and infrastructure projects, as well as community and grass-roots oriented Small Development Projects (SDPs) in the key areas
of education, health and rural infrastructure. The infrastructure projects include construction of four Integrated Check Posts (ICPs) for trade promotion and facilitation, 1450 kms of Terai Roads, and cross-border rail links at five locations.In the first
phase, works have been taken up in two of the four ICPs (grant assistance of NRs 4.32 billion for the segment falling in Nepal), six segments of Terai Roads Project (totalling 605 kms entailing grant assistance of NRs 11 billion) and two of the five rail connections
(grant assistance of NRs 10.4 billion). Under SDPs, of the 425 projects undertaken, 218 have been completed. The current year’s outlay for these development projects is NRs 6.08 billion.

India partners Nepal in capacity building and human resource development. This year, the number of scholarships offered to Nepalese students has nearly doubled to 3,000. The number of training programmes under India Technical and Economic Cooperation (ITEC)
& Colombo Plan has also gone up to 230 from 100 last year.